Ten31 Timestamp 864,304

Oct 05, 2024

A blowout jobs headline for September closed out the week with a bang, as the latest Nonfarm Payrolls report came in well above expectations and immediately engendered op-eds praising the Federal Reserve’s near-achievement of a “soft landing.” As always, a closer look paints a much more complex picture, but that didn’t stop markets from pushing higher on the news, even as the headline called into question the consensus pace of Fed rate cuts. Meanwhile, the US national debt gapped up by nearly $300 billion in a single day to kick off the new fiscal year and is now set to reach $36 trillion before calendar year-end. Despite this consistent and bipartisan profligacy – which has included blank check foreign aid arrangements totaling hundreds of billions in just the last few years – the US federal government surprisingly found itself tapped out for aid to communities destroyed by Hurricane Helene in the Southeast this week. As the state grows more bloated and less reliable, our conviction in the value of tools like bitcoin and nostr that empower individuals only grows, and we encourage any readers to donate to rebuilding efforts as they’re able.

Portfolio Company Spotlight

Start9 provides software and hardware to empower users to easily take control of their digital lives by self-hosting their own personal servers independent of third parties. With intuitive mass market software and one-click installations of popular programs like Bitcoin Core, Mempool.space, various lightning implementations, and 30+ other services, Start9 enables a move away from the current computing paradigm of custodial services that limit privacy, data integrity, and personal autonomy. The company’s exciting roadmap aims to do for personal servers what Microsoft and Apple did for personal computing, which we expect to become progressively more valuable over the coming decades as financial and tech counterparties become less reliable and more invasive.

Selected Portfolio News

Start9 launched an official StartOS package for Alby Hub, a tool for user-friendly management of lightning channels and liquidity:

Media

Fold Founder and CEO Will Reeves joined the Green Candle Investments podcast to discuss bitcoin as a savings vehicle and the merging of bitcoin with traditional financial tools.

Market Updates

The latest US Nonfarm Payrolls update showed an increase of 254,000 jobs in September, substantially above both August and consensus figures, which immediately triggered calls that the Fed’s “soft landing” White Whale is just around the corner.

As has generally been the case for the past few years, some notable caveats lurked under the surface of this headline, including outsized benefit from part-time workers, multiple jobholders, and government employee growth.

Those nuances notwithstanding, Federal Funds Rate futures – which directionally suggest how investors expect the benchmark interest rate to move – swiftly declined to imply only one 25bps cut at next month’s FOMC meeting, down from >50% odds for a 50bps cut last week.

Yields on US government bonds spiked on the jobs headline, with the 10-year now sitting just a hair below 4% again.

It was an awkward week for the pace of rate-cutting to come into question, as the latest US national debt update showed an increase of nearly $300 billion in a single day. The debt is now on the cusp of touching $36 trillion, a significantly heavier burden with rates stuck at 4-5% than the ~0% that prevailed for most of the past 15 years.

Overseas, Japan’s new Prime Minister indicated the country is not planning another rate hike in the near-term after a meeting with the leader of the Bank of Japan, a sharp reversal from rhetoric coming out of the BOJ just before August’s Japan-led implosion.

Chinese equities continued ripping higher this week and are now up nearly 30% since the announcement of the PBOC’s latest stimulus bazooka two weeks ago.

Meanwhile, the UN’s World Food Index increased sharply M/M and rose Y/Y for the first time in nearly two years, another awkward data point if global central banks actually plan to continue the near-universal move toward monetary easing.

Regulatory Update

Democratic Congressman Ro Khanna publicly advocated for the US not to sell its 200,000+ seized bitcoin in the interest of creating a strategic bitcoin reserve, the latest indication that both sides of the aisle increasingly view bitcoin as an advantageous campaign issue.

Utah Senator Mike Lee introduced the Saving Privacy Act, which would repeal several provisions of the Bank Secrecy Act, repeal the Corporate Transparency Act, strengthen Fourth Amendment protections, and more.

The UK passed new legislation giving banks the authority to freeze payments for up to four days, ostensibly in the interest of investigating and deterring potential fraud.

An Ohio state senator reintroduced a bill that would allow residents to pay taxes with bitcoin.

Noteworthy

Legacy technology fragility was on full display this week, as both Bank of America and Verizon experienced widespread outages.

Stablecoin giant Tether assisted the Department of Justice in seizing over $6 million in funds linked to an alleged social engineering scam.

Mining pool OCEAN announced the closed beta launch of its DATUM protocol, a potential alternative to the recently developed StratumV2 protocol that seeks to decentralize bitcoin mining’s block construction process.

OpenSats issued its second wave of education grants as well as a long-term support grant for lightning-focused developer Dusty Daemon.

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